W20 & Emerging Markets Sustainability Dialogues (EMSD)

The Effects of Digitalization on the Gender Equality in the G20 economies

Conducted by Kiel Institute for the World Economy

Alina Sorgner, Christiane Krieger-Boden, and Eckhardt Bode

Aim and scope of the study

According to World Bank’s 2016 World Development Report, new digital technologies bear great opportunities for women to participate more easily in the labor market and to be self-employed. The main objective of the present study is to investigate how the digital revolution characterized by machine learning, big data, mobile robotics and cloud computing, will affect the gender gaps in G20 countries, and which opportunities digitalization will provide to narrow the gender gaps.

The study focuses in particular on the role of digitalization on women’s labor market inclusion and financial inclusion. Furthermore, it provides a survey of selected policy measures and initiatives in G20 countries that aim at reducing the digital gender divide, which can be regarded as an incremental barrier to women’s economic empowerment in the digital age. Last but not least, the study will derive policy recommendations and examples of best practices.

Key findings of the study

1. Current technological change significantly affects labor markets by wiping out a great amoung of jobs. The results of our study suggest that about 40%-60% of jobs in various G20 countries will face a high risk of digitalization in the near future. Women’s jobs will, on aggregate, face slightly lower risks than men’s jobs, though. This is primarily because jobs typically held by low-skilled women, e.g., in health care and services, are less easily automatized than jobs typically held by low-skilled men, e.g., machine operators in manufacturing industries. The advantage of women that results from a more favorable composition of low-skilled jobs is, however, partly offset by the fact that women are still underrepresented in high-skilled jobs that are least susceptible to digitalization. Gender gaps are still significant among university graduates and in STEM- and managerial occupations.

2. Women often have superior social skills that gain strongly in importance in the digital age in both manual tasks (e.g. health care) and abstract tasks (management, professional jobs). The combination of social skills with digital skills will allow women to exploit the benefits from digital technologies more extensively. However, there still exists a significant digital gender divide in many G20 countries with regard to the access to, and the use of mobile and digital technologies. This gap is particularly pronounced in rural areas of developing and emerging economies. Women are less likely to use mobile and digital technologies in these countries primarily because they lack technical literacy, because these technologies are still relatively expensive, and because of the perceived security problems related to new digital technologies.

3. Digitalization does not only destroy existing jobs but also creates new entrepreneurial opportunities. Women should have equal chances to recognize these opportunities and benefit from them. Currently, women are less likely than men to pursue an entrepreneurial carrier, and the gender gap is particularly pronounced in entrepreneurship in ICT and knowledge-intensive sectors. The reasons for this gap are manifold. They include the lack of managerial or work experience in ICT sectors, the lack of entrepreneurial role models, low levels of self-confidence, insufficient entrepreneurial skills, and the lack of necessary financial capital needed to set up a business venture. With regard to the latter barrier, a promising example is that of various digital platforms that aim at increasing the level of external equity capital for women entrepreneurs, but also the number of women investors.

4. Digitalization of financial products and services provides opportunities to greatly advance financial inclusion of women. It allows to significantly reduce cultural barriers that prevent women from accessing financial services, helps to overcome mobility constraints, and provides more privacy, which can help reduce discrimination and promote autonomous decision making. Moreover, digital financial services will, in combination with the Big Data, enable women to increase their creditworthiness. They will facilitate alternative risk assessments based on transaction histories rather than collaterals and social acceptance.

5. G20 governments and several NGOs have taken various measures and initiatives to improve the digital inclusion of women. Most of these measures and initiatives address women’s capacity building, digital literacy, mentoring, awareness raising, girls’ and women’ reluctance to engage in ICT or STEM activities, and entrepreneurial initiative. Other measures aim at removing barriers such as written laws, unwritten rules and stereotypes. More broad measures, such as building of digital infrastructure, benefit population in general.

Kiel Institute for the World Economy (IfW)

The IfW is an international center for research in global economic affairs, economic policy consulting, and economic education. It engages especially in creating solutions to urgent problems in global economic affairs. The Institute lays a special focus on economic education.